EU wants upfront relief for key sectors in any US trade deal, sources say

Reuters

a day ago

BRUSSELS, July 1 (Reuters) - The European Union wants immediate relief from tariffs in key sectors as part of any trade deal with the United States due by a July 9 deadline, but the bloc expects even a best-case deal to include a degree of asymmetry, EU diplomats told Reuters.
The European Commission, which coordinates EU trade policy, is pushing three key points in Washington this week even as it accepts the U.S. baseline tariff of 10% as unavoidable.
Both sides are working towards an agreement in principle, with the final details to be ironed out later. In a short negotiation document Washington sent last week, the Trump administration only presented what it expects from Brussels without any concessions of its own, EU diplomats briefed on the matter said.
For any deal, Brussels wants in return a reduction of baseline tariffs to pre-Trump levels or a zero-for-zero tariff in cases when it existed.
That means specifically lower tariffs for alcoholic beverages and medical technology, on which the U.S. applies its 10% tariff.
The EU also wants a deal to cover commercial aircraft and parts, pharmaceuticals and semiconductors, sectors the U.S. is investigating, but has not yet imposed extra duties on. Trump said in June the pharma duties would be announced "very soon".
Secondly, the EU wants a concession from U.S. President Donald Trump on the 25% tariff on cars and car parts, the diplomats said, and an immediate lowering of U.S. steel and aluminium import tariffs, which Trump hiked to 50% in June.
One diplomat said cars were a "red line" for the bloc. However, Brussels and Washington have conflicting goals as Trump wants to revive U.S. auto production while Brussels wants open markets for its sector, which is struggling with high energy costs and competition from China.
Thirdly, the EU wants tariff relief to start as soon as an initial agreement is reached, rather than waiting weeks or months for a final accord. A number of EU members said a deal without this would be unacceptable, the sources said.
EU trade chief Maros Sefcovic and the European Commission president's head of cabinet Bjoern Seibert head to Washington later this week hoping to reach a deal.
Trump has suspended higher tariffs until July 9 in order to strike deals with global trade partners. He has said countries without deals will see 10% U.S. baseline tariffs on goods jack up to rates of as much as 50%. For the EU, that rate is 20%, although Trump has also threatened a 50% duty on all EU imports.
A week before the deadline, the Commission told its 27 member states all outcomes were still possible, from a successful framework agreement to higher U.S. tariffs covering additional sectors, the diplomats said.
If its goal of upfront tariff relief fails to materialise, Brussels will have to choose between accepting significant imbalances or responding with countermeasures.
Another scenario could be a deadline extension. U.S. Treasury Secretary Scott Bessent said on Monday any extension would be Trump's decision, with deals to be wrapped up by September 1.